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Want jobs and growth? Forget business tax cuts

On the face of it, the idea that you can increase employment and pump up economic activity by reducing corporate taxation sounds straight forward and uncontroversial. After all, the less company revenue that goes to the tax man, the more should be on hand for things like hiring more staff, buying new equipment and the like.

Ultimately, the thinking goes, the boost to employment and growth will make everyone a winner.

It is the deceptively simple idea that lies at the heart of the Coalition’s economic plan to boost jobs and growth by implementing $48 billion worth of business tax cuts over the next 10 years.

It also happens to be wrong.

Many have already pointed out that the benefits of stronger growth and increasingly profitable businesses don’t necessarily “trickle down” through more and better-paid jobs, as some naively believe.

The widening gulf between a small group of high-income “haves” and the rest of society is evidence of that. In Australia in 2013-14, 62 per cent of all household wealth was concentrated in the top 20 per cent, while the bottom 20 per cent held just 1 per cent of all wealth. Ten years earlier, the wealthiest 20 per cent owned 59 per cent of all wealth.

As The Economist reported this week, the proportion of working poor in the UK is increasing – 10 years ago about 40 per cent of those in absolute poverty (income less than 60 per cent of the national median, after housing costs) lived in households where people were in some sort of employment. Today, that proportion has risen to more than 50 per cent.

Try telling workers whose wages have yet to recover to pre-GFC levels even while house prices soar, and it is little wonder that an election pitch centred on business tax cuts is a hard political sell job.

But added to well-founded scepticism about who will actually benefit from business tax cuts is an even deeper problem that makes them a poor prescription for jobs and growth.

The searing experience of the GFC and its aftermath has provide a wealth of information to digest about what works and what doesn’t in trying to support economic activity and employment at times of low or stagnant growth.

Among those who have taken a close look at the effectiveness of government stimulus measures is Princeton University economist Alan Blinder.

Blinder, who is a former Vice Chairman of the US Federal Reserve’s Board of Governors and served on Bill Clinton’s Council of Economic Advisers, has run the ruler over the various actions taken by the US Government in the wake of the Lehman Brothers collapse, from welfare handouts and the Cash for Clunkers program to infrastructure and defence spending and business tax cuts.

His findings (http://www.hamiltonproject.org/papers/fiscal_policy_reconsidered) will hearten Keynesians and should give those who spruik business tax relief as the first and best policy response to a downturn pause for thought.

What Blinder found was that the most effective action taken by the US Government was to target temporary handouts to low income households through the Supplemental Nutrition Assistance Program (formerly known as food stamps).

In the first three months of 2009, for every $1 directed by the government through SNAP, $1.74 worth of economic activity was generated.

Extending unemployment insurance benefits had a 1.61 multiplier effect over the same period, while a temporary boost to work-share programs had a 1.69 multiplier effect.

Even increasing infrastructure spending was found to have a significant multiplier effect, though Blinder said the time lags involved in commissioning and undertaking capital projects meant that it was a stimulus measure more appropriate for prolonged downturns rather than shorter ones.

But, effective as some of these spending measures proved to be, there was great clamour from more conservative members of Congress for tax cuts as the tonic the ailing economy needed.

Here, Blinder found the evidence was mixed.

While temporary tax cuts and credits targeted at “liquidity constrained” (read, hand-to-mouth) households had appreciable multiplier effects (like Child Tax Credits, 1.38 times; Earned Income Tax Credits, 1.24 times), permanent tax cuts were much less impressive in their effectiveness.

The multiplier effect of permanent cuts to dividend and capital gains taxes was 0.39, and for a permanent cut in the corporate tax rate, it was just 0.32.

Not only were corporate tax cuts much less impressive as a stimulus measure, but they were prone to getting hijacked by the business lobby and turned into something whose prime purpose was to plump profits rather than fuel economic activity.

As evidence, Blinder cites the experience of an accelerated (“bonus”) depreciation measure included in a 2002 tax cut bill.

The change, which had the effect of putting investment goods “on sale” for a limited period of time, was originally due to expire after 18 months. This short duration was considered key to its effectiveness as a stimulus measure.

Instead, business lobbied hard to have the bonus depreciation extended…and extended… and extended…so much so that last year legislation was passed to keep it going until 2019.

“Ironically, we may have destroyed the usefulness of bonus depreciation as a countercyclical tool by making it permanent,” Blinder says, and advances what he calls a general theorem of political economy: “Business tax cuts artfully designed by economists for maximum bang for the buck will be altered by lobbyists to achieve maximum revenue loss instead”.

The reason is that “business lobbyists don’t care about ‘bang’, but care deeply about getting more ‘bucks’ for their clients, and lobbying almost always overpowers economic logic”.

 

The lesson, says Blinder, is to be wary of using investment incentives as a stimulus measure.

Many might object that American business and politics is a lot different to that in Australia and, anyway, we are a long way from the dire economic circumstances that confronted policymakers in late 2008 and early 2009, so Blinder’s analysis has little to tell us.

But the real question is, is a company tax rate of 30 per cent stifling activity, and would cutting it to 25 per cent over the next 10 years unleash a wave of investment and jobs growth?

The evidence suggests the answer to both questions is no.

As the Reserve Bank of Australia has observed, what has been holding growth down in Australia has been the plunge in global commodity prices and the fall in resources investment.

This has been partially offset by the effects of low interest rates and a weaker currency, which has encouraged growth in services exports and housing investment – both oif which have helped support an improvement in consumption to around its decade-long average of 3 per cent.

Arguably, what has been weighing on hiring and non-mining investment for the last few years has been soft demand and uncertainty about the outlook.

A $48 billion company tax cut might help firms capitalise on the improvement in consumption, but it is hard to see how it would drive it. Unless there is a compelling reason to hire and invest (read: an opportunity to make money), businesses are unlikely to make an outlay, regardless of whether the tax rate is 30 per cent or 25 per cent.

Instead, much of it could find its way into the bank accounts of lawyers and bankers devising M&A activities or pumping up shareholder dividends.

 

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Why the gloomsayers are overdoing it

When national leaders talk up how good things are, it is often taken as a sign that they are about to turn very bad.

So when Barack Obama and Malcolm Turnbull each delivered upbeat speeches in the past week, more than a few pessimists probably took them as vindication of their bleak outlook.

After all, there seems to be plenty to be worried about.

The new year has begun in a flood a red ink on global sharemarkets as China growth fears, weak commodity prices, terrorist attacks and natural disasters have all weighed heavily on investor sentiment.

For those determined in their gloom, the latest update on the Chinese economy suggested additional reason for pessimism. The world’s second largest economy expanded at an annual rate of 6.9 per cent in the last three months of 2015, its the slowest pace in 25 years.

Taken together with the decision by the International Monetary Fund to trim its global growth forecasts for 2016 and 2017 by 0.2 of a percentage point each to 3.4 per cent 3.6 per cent respectively, and the bearish mood would seem to be well founded.

But in striking discordantly upbeat messages about the outlook, Messers Obama and Turnbull are not just handing around warm cups of cocoa.

There are concrete reasons to think the gloom is overblown.

Although a sudden upsurge in economic activity appears as likely as a return by Tony Abbott to the Lodge, there are several pointers – local and international – that suggest optimism is not misplaced.

Most importantly, the US economy – still overwhelmingly the largest in the world – appears well established on a growth path.

If the US Federal Reserve’s much-anticipated interest rate increase late last year did not confirm it, a streak of sustained jobs growth that has seen the unemployment rate halve from 10 to 5 per cent ought to allay doubts.

Yes, many jobs have been part-time or casual, and wage growth is weak. And there are headwinds from the weak oil price, which has kicked the stuffing out of the shale gas industry, and the increasing US dollar, which will weigh on export competitiveness.

But cheaper petrol has also boosted real household income, and the American consumer is back shopping and spending, which in turn is encouraging businesses to hire and invest.

As has been widely recognised for some time now, China is engaged is engaged in a highly challenging phase in its economic and political development.

The investment-led growth model that has powered its expansion for the last 25 years has run its course, and left a massive overhang of excess capacity and troubling debt.

If this was not challenge enough, the central government’s reluctance to loosen its control over the economy is coming back to bite it. As The Economist notes, its current situation of a slowing economy, a semi-fixed currency and increasingly porous capital controls is a volatile combination – if the government loosens monetary policy to boost consumption, it will weaken the currency and encourage even more capital to flow offshore.

Still, the Chinese government has plenty of ammunition if recession threatens – $US3 trillion of foreign exchange reserves and ample room to trim interest rates and devalue the yen.

The gloom about Australia’s prospects is also overstated.

The fall in commodity prices has been steep, but so was their rise. As Rod Sims recently pointed out in The Australian Financial Review, the current dominant market narrative of a “collapse” in commodity prices is underpinned by a short-term view. From a historical perspective, they are more accurately depicted as returning toward their long-term average.

Pessimists also point to soft wages growth and a weakening housing market as causes for concern.

But the country is generating sufficient jobs to edge the unemployment rate lower – it fell to 5.8 per cent in December – setting a firmer base under pay rates and raising the prospect of an eventual consumption-boosting lift in household incomes as spare capacity shrinks.

And although capital gains in housing have slowed as some of the heat has gone out of the property market, sentiment toward buying shows signs of picking up.

On the question of whether now was a good time to buy a dwelling, the Westpac-Melbourne Institute Consumer Sentiment Index found a sharp improvement in mood. The index jumped almost 14 per cent this month to 113 points – the highest reading since May last year and only a little below the level of a year ago.

Westpac chief economist Bill Evans says the reading should be treated with some caution, but nevertheless “ma be signalling some improving optimism in the housing market”.

This interpretation is supported by a jump in house price expectations following a plunge in the second half of 2015.

Late last year, Reserve Bank of Australia Governor Glenn Stevens estimated the economy was “roughly half way” through the decline of resources investment, and a rebalancing in the sources of growth was underway – a process that will be greatly aided by the falling currency.

Economic commentary often exudes an unjustified air of certainty.

But the sharemarket’s current bloodletting, but a focus on this has tended to blot out some of the more positive big picture developments occurring.

This is one of those seemingly rare occasions when it may pay to heed the message of political leaders.

 

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Why what happens in Washington matters in Canberra

Among the economic indicators Treasurer Scott Morrison needs to keep an eye on, the US labour market should be toward to the top of the list.

As the US Federal Reserve begins to gradually edge up its funds rate, Chair Janet Yellen has indicated the tightness of America’s market for workers will be an important factor in shaping the central bank’s thinking on how quickly to proceed with tightening monetary policy.

The state of the US labour market matters because as it gets tighter, so the bargaining power of workers is likely to increase and wages rise, helping force inflation up.

The higher inflation goes, the more the Federal Reserve will feel compelled to raise interest rates.

This matters for Australia because the higher official US interest rates rise, the greater the downward pressure on the Australian dollar (though this relationship should not be overstated).

As the Australian economy tries to establish sources of growth outside the boom-and-bust resources sector, a lower dollar helps by making exports and locally-made goods and services more competitive.

In the past year, the $A-$US exchange rate has slipped down more than 10 cents to 71.2 cents, a far cry from the above-parity levels reached earlier this decade, when massive mining investment was sucking in huge amounts of capital.

Given that the US unemployment rate has already dipped to 5 per cent, it might come as a surprise that the Federal Reserve has only just begun to increase interest rates.

But behind the headline number, data shows that many of the jobs created in the last few years have been casual or part-time. This suggests that there is considerably more slack in the labour market than a 5 per cent unemployment rate would ordinarily imply.

Recent soft income growth underlines the point. In the year to September, US wages grew by 3.66 per cent, virtually half the long-term average of 6.33 per cent.

This is being reflected in consumer spending – US retail sales grew by a modest 1.7 per cent in the year to November.

The Federal Reserve held off embarking on a tightening cycle until it was confident that the US recovery from the global financial crisis was well-established, so its decision earlier this week to raise interest rates, even by a meagre amount, is seen as a vote of confidence in the world’s largest economy.

As he contemplates the sea of red in the Commonwealth’s financial accounts, Scott Morrison can only hope that this is the case.

Despite his bizarre denialism on the matter, the Federal Government does indeed have a revenue problem. Collapsing commodity prices and soft income and corporate tax collections account for a lot of the deterioration in the Budget position.

And the government’s own forecasts suggest there is not going to be a quick turnaround. Earlier predictions that the economy would expand by 2.75 per cent this year have now been pared back to 2.5 per cent, and next year it is expected to grow by 2.75 per cent rather than 3.25 per cent.

Estimates of business investment, household spending, the terms of trade and private final demand have all been downgraded.

As Reserve Bank of Australia Governor Glenn Stevens observed last month, a rebalancing in the sources of growth is underway, but it is a little rockier than might have been hoped for.

With the economy poised between the drag caused by tumbling resources investment and support coming from a nascent recovery in non-mining activity – particularly services – now would seem a bad time to be adding to the weight on activity by cutting into government spending.

To his credit, Morrison has so far eschewed the sort of bloodletting Joe Hockey pursued in his first Budget.

But the cuts he has outlined – crackdowns on welfare ‘rorts’ and the axing and reduction of bulk billing incentives for pathology and diagnostic imaging services, in particular – make little economic sense.

Both sets of measures, collectively worth more than $2 billion, will mean consumers have less money to spend.

As the country’s experience through the GFC has shown, this is significant. Arguably the most effective measure taken by the Federal Government when the GFC hit in late 2008 was to deposit money directly into the bank accounts of millions.

While much of this money was saved, enough was spent to keep shop tills ticking over, shielding thousands of retail and services sector jobs.

This was especially the case among lower-income households, where a higher proportion of income has to be spent rather than saved.

The bulk of Morrison’s cuts will fall on just such households.

At a time when retailers and service providers are trying to find their feet after several years of lacklustre conditions, this is hardly helpful.

Such unhelpful tinkering by governments all too common.

Economists often lament that government interference prevents an economy’s ‘automatic stabilisers’ (floating currency, swings in tax collections and welfare payments) from working effectively, making a difficult situation far worse.

But it is totally unrealistic to expect governments in such situations to do nothing – after all, they have usually been elected on a platform to ‘do something’.

As Ross Gittens suggests, they could do much worse than to devote their energies into devising a path to surplus that kicks in once a recovery is established, and to work out how to better handle future prosperity.

 

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Hackneyed penalty rates debate sells nation short

When politicians and business leaders talk about the need for flexibility, it is usually preceded by the word “labour”, and often comes down to cutting penalty rates, leave arrangements and other worker entitlements.

Which is what makes the contribution by Reserve Bank of Australia Deputy Governor Philip Lowe particularly refreshing.

While Lowe sees a flexible labour market as contributing to the overall adaptability of the economy, it is only but one part of the picture.

Instead, in his speech to the CFA Institute conference, the senior RBA official seen as a front-runner to head the central bank when Glenn Stevens retires, emphasises the importance of a freely-floating exchange rate, financial innovation, robust competition, incentives for innovation and investment in education as critical to the flexibility of the economy.

This is a much broader picture than the current hackneyed focus on industrial relations, and it opens up many more fruitful avenues for action and reform.

The wrongheadedness of the “IR-only” focus underlined by the fact that, by and large, current labour market arrangements seem to be serving the country fairly well.

As Lowe says, during the resources boom there was little spill-over from huge wage increase in the mining sector, while in the subsequent slowdown flexible work hours and weaker wage growth have helped limit unemployment.

“From a cyclical perspective, the labour market has proved to be quite flexible, and things have worked reasonably well,” he says.

In its recent assessment of the nation’s workplace relations, the Productivity Commission similarly thought the IR system was in need of repair, rather than replacement.

“Contrary to perceptions, Australia’s labour market performance and flexibility is relatively good by global standards…Strike activity is low, wages are responsive to economic downturns and there are multiple forms of employment arrangements that offer employees and employers flexible options for working,” the Commission reported.

Not that everything is rosy.

The Productivity Commission was critical of the Fair Work Commission’s “legalistic” approach to award determination, and suggested the need for an “enterprise contract” as a mid-way point between enterprise agreements (unwieldy for small businesses) and individual arrangements. It also said that at the moment it is too easy for employers to dodge punishment for sham contracts and exploiting migrant workers.

But overall the Commission supported, with some caveats, the minimum wage, penalty rates, Australia’s “idiosyncratic” awards system and enterprise bargaining.

Lowe’s speech suggests there are other areas that demand greater attention.

He says maintaining a flexible financial sector will be crucial in ensuring business is able to grab opportunities as they emerge. To achieve this, regulations will have to strike a judicious balance between supporting financial innovation while protecting investors.

Competition policy needs to ensure that businesses harnessing new technologies do not face unfair barriers to entering the market, and that the tax and legal systems – as well as community attitudes – provide incentives for innovation and entrepreneurship.

In education, Lowe says, “continual improvement in our human capital will hold us in good stead”, and has urged the need to strike a balance between developing specific technical and professional skills and encouraging general learning.

Many may quibble about what is on, and not on, Lowe’s list, but it opens things up a much more fruitful debate about what needs to be done to make sure the country is best-placed to take advantage of future opportunities as they arise.

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An inconvenient obsession

There was a glimmer of hope earlier today that, boxed repeatedly around the head by evidence that the economy isn’t really travelling so well and that slashing Government spending was only compounding the problem, Joe Hockey had a conversion of sorts.
The Treasurer talked in almost Keynesian terms of the need for the Budget to act as a “shock absorber” for the economy.
Was the political obsession with returning the Budget to surplus as soon as a possible and bugger the consequences for the rest of the economy to be consigned to the rubbish heap of history?
Unfortunately, it appears not.
Whatever Joe Hockey’s rhetoric, in its latest update on the economy, the Government remains obsessed about public spending, devoting a major slab of the Mid Year Economic and Fiscal Outlook (MYEFO) to its “Smaller Government” reforms, including cutting the size of the public service to levels last seen in 2007-08, holding down public sector wage growth to 1.5 per cent a year and axing 175 Government bodies.
None of these bode well for support for economic activity.
The fact is, in earlier times, governments could fiddle with the Budget and not worry too much about the effects on the economy.
But, as Reserve Bank of Australia officials pointed out in a research paper earlier this year, governments need to be a lot more careful now:
“The changes to the taxation system overall are likely to have increased the sensitivity of revenues to fluctuations in the terms of trade and economic activity in the current episode.[8] The larger size of government means that the operation of automatic stabilisers has a more significant effect on overall economic activity” – Australia after the Terms of Trade Boom, RMA Bulletin, March 2014.
There is no doubt that the Budget is looking pretty ugly.
Tax receipt estimates have been slashed by $31.6 billion since May, contributing to a $43.7 billion deterioration in the Budget position.
As a result, the deficit this year (2014-15) is expected to reach $40.4 billion (as opposed to $29.8 billion in May), and the books will stay in the red right through the forward estimates – a deficit of $11.5 billion is projected in 2017-18.
There is no return to surplus projected until very late this decade, at the earliest.
This outlook is hardly surprising given what we have been through, not least a global crisis that has left the international financial system badly shaken.
Overlaid on this has been the unsettling surge and ebb of the resources sector.
Booms, whatever their source, rarely end smoothly, and the economy was always likely to hit some rocky times as mining-related investment faded and other sectors were slow to pick up.
One of the features of this period – a rapid decline in the terms of trade – was hardly unanticipated. All along, it was expected that the massive worldwide investment in mining capacity, encouraged by soaring commodity prices, would drive a huge increase in supply that would drive prices down – and this is what has happened.
In the lead-up to releasing today’s Mid Year Economic and Fiscal Outlook, the Government has been enthusiastically briefing the media on what has been described as a “collapse” in the terms of trade (principally as a result of plunging iron ore prices) and what this has meant to Commonwealth revenues.
It has been keen to highlight a 50 per cent plunge in global iron ore prices since the start of the year, including 30 per cent since the May Budget.
“The extent of the fall in the price was widely unexpected,” the Government said in MYEFO – Treasury had estimated a drop from $US120 a tonne to $US92 a tonne by mid-2016, whereas it is currently at $US63 a tonne.
The result of these and other moves, the Government says in MYEFO, “would be the largest fall in the terms of trade in a financial year since the Australian Bureau of Statistic’s Annual National Accounts started in 1959-60”.
But, as one of this column’s correspondents, Property Insights principal Rob Ellis points out, claims of a record fall in the terms of trade are overblown.
True, the terms of trade have fallen sharply (the index has fallen below 160 points surging above 180 around the start of the decade), but they are still very high in historical terms (see chart).
Nonetheless, the Government has trimmed its real non-farm GDP growth forecasts. The economy is now expected to expand by 2.5 per cent this financial year (a 0.25 percentage point reduction from the May forecast) but still grow by 3 per cent in 2015-16.
And it expects household consumption to grow at a similar rate – a questionable assumption when many workers are seeing their pay go backwards in real terms, and rising unemployment and slowing house price growth are only making households even more careful about their spending.
Dumping even more off the public payroll and squeezing the incomes of those left on it is only going to make the task of achieving these growth forecast more difficult.
terms of trade

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Nothing to see here, move along

The Reserve Bank of Australia is dangling a prolonged period of record low interest rates in front of businesses and consumers as it tries to foster economic growth in the face of what is expected to be an austere Federal Budget.
The release of the National Commission of Audit report has amped up concerns, particularly among retailers and other businesses directly dependent on household spending, that a severe Budget will crunch spending and stall growth.
While the forthcoming Budget would undoubtedly have figured in the discussions of the RBA Board, Governor Glenn Stevens was content to repeat his observation from last month that “public spending is scheduled to be subdued”.
Instead, the central banker drew attention to developments in the labour market, and their implications for inflation and, hence, interest rates.
The surprise drop in the unemployment rate in March to 5.8 per cent had some speculating that the labour market was on the improve, raising the prospect that monetary policy might soon have to tighten.
But the RBA thinks this outlook is premature.
Mr Steven admitted that there were signs conditions in the labour market were improving, but cautioned “it will probably be some time yet before unemployment declines consistently”.
Budget cuts to the public service and Commonwealth spending (including welfare payments) are only likely to prolong the period of softness in the labour market.
While this is bad news for job seekers and those hoping to trade up to a better position, weak employment growth has had a silver lining.
As Mr Stevens explains, the slack labour market has helped keep a lid on wages, which in turn has limited the ability of retailers to jack up their prices.
The result is that the cost of domestically-priced goods and services (often the driver of inflation) has been contained, and the RBA Governor said “that should continue to be the case over the next one to two years, even with lower levels of the exchange rate”.
What that means is that the Reserve Bank does not see inflation breaching its 2 to 3 per cent target band in the next two years, giving it ample room to hold interest rates down for an extended period.
While it is unlikely that they will still be this low in early 2016, it could well be late this year or even early 2015 before the RBA feels compelled to begin edging them up – notwithstanding the surge in house prices in the major cities.

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When the bank calls, bells start ringing

If, like me, in the last couple of days you’ve had a call from your bank eager to talk about how to they could save you money on your mortgage, you’ve probably twigged that something is up.

Usually they call to flog insurance policies I don’t want, or offer a lift in my credit card limit that I can’t afford.

So to hear them actually prepared to come to the table to strike a cheaper deal on what is one of their core products is an interesting development.

It tells me that their own economists have told them the prospects of an official interest rate rise sometime this year are looking pretty slim.

This is no news to the market, which sees no chance of a rate hike before March next year, and instead is pricing in the possibility of a rate cut.

As RBA Governor Glenn Stevens put it today when announcing the Reserve Bank Board had decided to hold the central bank’s cash rate steady for a seventh consecutive month, “on present indications, the most prudent course is likely to be a period of stability in interest rates”.

It also shows that the field of competition has well and truly shifted from deposits (remember when the interest rate on 3-month deposits reached above 5 per cent? It is now down to around 3 per cent), and the scramble now is to sign up home buyers.

It is pretty clear that at the moment the economy is like a dog on roller skates, desperately trying to gain some traction.

Mr Stevens said that, while consumer demand was “slightly firmer”, and data foreshadowed a “solid expansion” in housing (building approvals jumped 6.8 per cent in January to be up almost 36 per cent from a year earlier), demand for labour is weak and the unemployment rate is likely to rise higher.

Its cause isn’t helped by a Federal Government that at every opportunity thunders about the dire state of the nation’s public finances and hints darkly at the need for painful spending cuts.

In central bank-speak, “public spending is scheduled to be subdued”.

It can’t be doing anything to improve the willingness of businesses to invest. Official figures confirm private capital expenditure has been sliding for the past couple of years, even as profits have grown – gross operating profits were up 107 per cent in the year to the December quarter, yet over the same period private capex fell 5.7 per cent (and spending on plant and equipment plunged more than 16 per cent).

As Mr Stevens put it, resource sector investment is set to decline significantly, while there are only “tentative” signs of improvement in investment intentions in other sectors.

The economy is partly the victim of an unfortunate clash of timing between the business and political cycles.

The incentive for the Abbott Government is to cut hard in its first Budget, giving itself room for vote-enhancing largesse closer to the next election, while the economy could do with some productivity-enhancing infrastructure investment.

Fat hope of that at the moment.

Even more people are likely to be out of work in the coming months, and being able to negotiate a cheaper mortgage is likely to be of little comfort.

 

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